Jun 4, 1985


GENEVA, JUNE 1 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Nearly decade old efforts, at the UN Conference on Trade and Development, to agree on an international code of conduct on transfer of technology have broken down over the issue of the applicability of key provisions of the code to Transnational Corporations (TNCs).

Negotiators worked all of Friday, and till four Saturday morning, in an effort to find mutually acceptable solutions, but failed.

The Conference will now meet in a final plenary on Wednesday, when it is expected to take a decision remitting the draft code, as it now stands, to the UN General Assembly for any necessary actions, including a possible reconvening of the negotiations.

The key issue on which no agreement could be reached related to the chapter four of the code on restrictive practices that parties should avoid.

The OECD Group wanted a formulation that would mean that while independent parties to international transactions on transfers of technology should avoid the listed practices, this would not apply to transactions within a TNC, between a parent and its subsidiary.

This was not acceptable to the Group of 77.

Various compromise formulations were tried out which would have given some leeway for TNCs, but would nevertheless have required the TNCs to conform to national laws and regulations and development policies of a technology-receiving country.

However, these proved unacceptable to the OECD countries.

Negotiations on this issue began on Thursday, and after working all of Thursday night, a tentative formulation to deal with the TNC issue emerged.

In effect this would have said that the restrictive practices set out in chapter four (to be avoided by parties to technology transactions), would not be considered "inappropriate" as between "related parties", provided they complied with national laws and declared development policies of the acquiring country.

According to Group of 77 sources, it became clear Friday night after all-night negotiations, that this compromise, or any variation, that would in effect require TNCs to abide by national laws of the acquiring country, was unacceptable to the hard-liners in the OECD Group.

Group of 77 sources said the three hard-liners were Netherlands, UK and USA.

Apart from these issues in the chapter four, there are also a number of other unresolved issues in the other chapters of the code.

But the TNC issue in chapter four was the key one, and if it had been solved, compromises on others would have easier.

The negotiators therefore decided to concentrate their effort on chapter four.

After night-long negotiations on Friday, they decided to call off the negotiations at four Saturday morning, merely agreeing to a procedural move to remit the issue to the UN General Assembly.

"At this stage in international relations and polity, an international code that would oblige TNCs to conform with national laws and regulations does not seem possible, and each country would have to take its won measures against TNCs to protect is interest to the best of its ability" one Conference participant said Saturday after the break-up.

"Perhaps at a future point, when countries begin to act individually and the TNCs find this complex of conflicting national laws affecting their interests, the TNCs themselves and their home-countries, might find it useful to seek an international code and regulatory framework. But that time is not yet", the participant added.